Lower interest rates push November sales higher in Toronto and Montreal
Based on preliminary November data, Canada’s housing market is ending the fall season on a stronger footing, according to RBC economist Robert Hogue. He attributed the upswing to lower interest rates and the prospect of further cuts in the coming year, which are converting pent-up demand into home-buying activity.
“We expect the upswing to continue into 2025, as interest rates fall further,” Hogue said.
Hogue noted that market activity is significantly higher than the historic lows seen last year, except in Calgary, which already demonstrated strong momentum in 2023. He expects this recovery to carry into 2025, particularly as affordability improves with declining interest rates.
The economist highlights the role of increased housing inventory this year in boosting the market’s performance during the fall. The additional supply offered buyers more options and helped drive resale activity, but Hogue emphasized that the current inventory levels reflect progress toward healthier market conditions: “The buildup in inventories this year has really helped in providing more options for buyers and driving the recovery.”
In the Toronto area, Hogue observed that the recovery gained further traction in November, with resales increasing by 1.9% from October on a seasonally adjusted basis. This follows a robust 12% increase in the previous month. While affordability remains a major challenge in the region, declining interest rates appear to have encouraged some buyers to re-enter the market.
In Montreal, Hogue described the market performance in November as a clear sign of rapid recovery. Home resales jumped approximately 15% month over month on a seasonally adjusted basis, nearly returning to pre-pandemic levels. This occurred even as fewer sellers listed their homes, keeping inventories stable.
Lower interest rates are driving demand, which Hogue said is pushing up prices. The median price of single-family homes increased 11% to $600,000, while condo prices increased by 8% to $425,000. However, Hogue cautioned that poor affordability could limit the pace of growth in the coming months.
Hogue also saw signs of recovery in Vancouver, where resales rose by 1% in November following a sharp 20% jump in October. While property values have remained relatively flat throughout 2024, the economist expects modest price increases moving forward, particularly in the detached home segment, which faces tighter supply-demand conditions. He added that the MLS Home Price Index for Vancouver was down just 0.9% year-over-year in November, indicating overall price stability.
Calgary continued to exhibit strong activity, with resales climbing 4% in November and sitting 50% above pre-pandemic levels. He attributed this strength to high demand relative to supply, though he notes that the city’s booming homebuilding activity is helping to replenish inventories.
This has eased upward pressure on prices, with the composite MLS Home Price Index increasing by 3.5% year over year in November—a slower rate than earlier in 2024. Hogue expects this surge in construction to help moderate price growth in the year ahead.
“The path to recovery looks promising, but affordability will remain a critical factor influencing market dynamics in the near future,” Hogue said.
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